How many New Zealand jobs can be done from home?

The pandemic confined the vast majority of us to work from home during the quarantine period. However, there are certain types of occupations such as masseuse and hairdresser that can not be performed from home. Inspired by the recent NBER paper on how many jobs can be done at home,

I have calculated rough estimates for New Zealand regarding the labour markets capacity to work from home.  Applying the same industry correspondence to New Zealand (based on LEED data) and using the US weights (so assuming the same ability to work from home by industry) I have calculated that 31%-36% of jobs can be done from home.

Read more

How is monetary policy useful given the COVID-19 shock?

In my last post I noted that the “supply or demand shock” framing for COVID-19 could be useful, but hid important elements – namely even when there is a real shock if we aren’t noticing rising factor prices (eg wages) there is a demand element.

Given current concerns most focus is on the question of how to deal with the consequences of a disaster now – in a way that doesn’t lower productive capacity in the future.  This is a good frame, and the New Zealand discussion has been strong relative to a lot of other countries.

However, even though a lot of the stores are closed now “demand” management is not just about that future – it needs to occur now as well.  As a result, monetary policy does have a role.

Read more

Why are all the shops so close to each other?

Gulnara keeps telling me that she needs to go shopping – but of course there is a nationwide quarantine so she’s stuck at home listening to me.

Although I feel some sympathy with her situation, I was worried that I will get dragged all around the place when we do go shopping in the future – and so we’ve gone online to look at Google Maps to figure out where we’ll need to walk. Having a look it appears we won’t have to walk around that far – as the clothing and perfume stores are all right next to each other.

So why is this?

Read more

Liquidity crises, wealth, and the government balance sheet

The events of the last two months have brought financial liquidity issues into sharp focus. As firms shut down for an indefinite period in response to the Coronavirus, the question on many people lips is “will this firm be able to survive without cash income?”

If they have large amount of cash in the bank, the answer is likely to be yes. Yet most firms don’t have a large amount of cash in the bank. Rather, they have large amounts of productive assets – sometimes physical assets like machinery and equipment, and sometimes intangible assets like good business routines, long standing customers, or patented technologies. These assets will produce them with cash incomes in the future – but only if they can survive until then. 

So how can we think about this issue?

Read more

Is COVID-19 just a supply shock?

In this post I want to have a bit of a brainstorm around the real shock we are facing with COVID-19 in the country. The key idea I wanted to think about was what type of shock this is – a supply shock, demand shock, or both!

Note that this is a public health crisis – and I recognise that these issues take precedence. But it is still important to think through the economic consequences, at least to understand what they are.

Three compelling tweets make the case for why the focus should be on supply, demand, or on some combination of both:

Read more

Hard and fast on Corona – Morocco style

For the last 8 months I have been teaching at a small liberal arts college in Morocco, Al Akhawayn University.  It is located 1600m high in a small town in the Atlas Mountains, about 60 km from Fez. 

Morocco went into full lockdown on Friday March 20 at 6pm, just after the 80th case was reported. Its reported trajectory has been very similar to that as New Zealand but, after a slow start, the response has been dramatically faster. At the moment there is a ban on all movement in public spaces, schools and universities are closed and education is on-line, non-essential work places are closed, and people have been issued certificates restricting their movement to two shopping trips per week. Borders have been closed for more than a week  – this is for all people, residents and non-residents, in and out. The ban is indefinite, presumably until the government is convinced the threat is controlled. 

I am writing this as the response is clearly different to that in New Zealand, even though both countries are reporting a similar infection experience. You may be interested to know what a preventive lockdown looks like.

Read more